My previous post offered charts and an analysis that dispels the notion that Las Vegas is experiencing another housing bubble. The chart below offers an additional perspective on the notion of a bubble by looking circumspectly at appreciation rates. Most would consider a 4% per year market value improvement as being reasonable. We see below that Phoenix and Las Vegas are at 2.98% and 2.48% respectively. Both markets have a long way to go just to resume a 4% appreciation rate, let alone be considered in “bubble territory”! If either market were to suddenly spike much above 6% or 7% – that should get our attention. But for now – let’s just enjoy the recovery!
Single family residential (SFR) closings for June 2013 are off 3.6% from last month. Meanwhile, YTD closings continue to lag last year by 12.0%. The SFR median closed sales price rose another 2.9% during June and is now $175,000. However, the median price has increased 31.6% during the past twelve months.
Perhaps the Las Vegas has hit a turning point this month? Cash sales, which have been accounting for 58 – 60% of all closings, dropped to 55% this month and may signal a significant market change ahead. It’s been a long time since conventional financing was above the 25% mark.
Distress sales are giving way to traditional, equity sales as the market values recover. Will this signal the exit of investors in the Las Vegas market? It’s already happening in Phoenix.
The Phoenix charts show that the Phoenix/Scottsdale market is recovering about six months sooner than Las Vegas. The most notable – and hopeful sign – is that conventional loans now make up 38% of the monthly closed sales in that market compared to 27% in Las Vegas. Also, 2013 YTD closed sales units in Phoenix are keeping pace with 2012 closed units despite soaring prices and a retreat by investors!